Earthquake insurance not a problem in the area

Wednesday, May 7, 2003Leonna Essner

"Prices did go up for a lot of companies and deductibles have changed." -- Steve Deere

SIKESTON -- Last week's earthquake in Blytheville, Ark., occurred in the center of the New Madrid Seismic Zone, once again reminding area residents of the unpredictable and uncontrollable work of Mother Nature, not to mention the destruction that can follow.

The availability of earthquake coverage has become an issue in some regions of the New Madrid Fault, however, local insurance agents indicate that shouldn't be a problem in the area.

"Prices did go up for a lot of companies and deductibles have changed," noted Steve Deere of Allstate Insurance. "Deductibles used to be about 2 percent and now they're anywhere between 10 and 15 percent."

Despite the increased rates and deductibles by the state last year, Deere admitted less than 10 percent of property owners and renters actually refuse the additional earthquake coverage offered with home owner's and renter's policies. Older home owners may choose not to carry earthquake insurance, but they're in the minority, he added.

While Cravens Insurance Agency owner Jim Cravens said there hasn't been an influx of people wanting earthquake insurance since recent earthquakes, ("You're about 12 years late," he said) there hasn't been a decline either.

"There are some companies who don't offer earthquake insurance. Some stopped back in 1990 after the prediction for the big New Madrid Fault earthquake never happened," Cravens explained.

Earthquake coverage varies a great deal in type and cost, explained Sharon Bryant, an agent for State Farm Insurance. State Farm does earthquake endorsements on any home, and with commercial property, seismic guidelines by code are applied. Things like building structure -- if it's frame or masonry -- also make a difference, she added.

"Earthquake insurance or endorsements come with most homeowner's and renter's insurance policies. In fact, insurance companies in the area have offered earthquake coverage for at least 16 years," Deere noted.

According to Federal Emergency Management Agency, the New Madrid Fault is the most seismically active region in the United States east of the Rockies. Since 1974, seismic detection instruments in the New Madrid Fault have recorded over 4,000 earthquakes.

Last week's earthquake in Blytheville reached a magnitude of 3.7, while an earthquake in Eastern Turkey on Thursday had a magnitude of 6.4 and an earthquake with a magnitude of 3.9 rattled Virginia Monday.

The New Madrid Fault caused some of the strongest earthquakes ever recorded on the North American continent over a three-month period during the winter of 1811-1812, according to FEMA. The quaking continued over 18 months. The shocks rang church bells in Boston. Large areas sank into the earth, new lakes were formed, and the Mississippi River changed its course. The most powerful shock was estimated to be greater than magnitude 8.0 and occurred on Feb. 7, 1812.

"Daily seismic movements occur in the area nearly every day, but they're so small, they're not noticeable," Deere said. According to the Insurance Information Institute, there's a 40 to 63 percent chance the New Madrid Fault region will suffer an earthquake with a 6.0 magnitude in the next 15 years.

The worst-case scenario of an earthquake -- other than death -- is losing property, Deere said. Rather than throw their hands up in the air and pray the Red Cross can help them, insurance can guarantee people will have a place to live with food and clothing.

Bryant said she encourages anyone who doesn't have earthquake coverage to check with their insurance agent because it is available.

"Earthquakes are so unpredictable -- you just don't know. Insurance companies don't even know," Deere noted. "They're a huge risk."